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Working Paper
Macroeconomic Expectations and Cognitive Noise
This paper examines forecast biases through cognitive noise, moving beyond the conventional view that frictions emerge solely from using external data. By extending Sims’s (2003) imperfect attention model to include imperfect memory, I propose a framework where cognitive constraints impact both external and internal information use. This innovation reveals horizon-dependent forecast sensitivity: short-term forecasts adjust sluggishly while long-term forecasts may overreact. I explore the macroeconomic impact of this behavior, showing how long-term expectations, heavily influenced by current ...
Working Paper
Recency Effects in Perceived Uncertainty
Firms frequently revise not only their expectations, but also how uncertain they feel about those expectations. Using the U.S. Survey of Business Uncertainty, we study perceived uncertainty about firms’ own sales and employment growth. Reported uncertainty rises after larger revisions to firms’ point forecasts, with the strongest response to the most recent revision. This recency pattern remains visible outside elevated sectoral-volatility episodes. We develop a model in which agents learn about a constant-volatility process but recall older observations noisily. Noisy recall gives recent ...
Journal Article
Consumer Vibe Check: Gas Prices and Inflation Expectations
According to household surveys, inflation expectations tend to move together with expectations for gasoline price changes. The relationship is not symmetrical, though: Inflation expectations rise when households revise up their outlook for gas price growth but change little when they revise it down. This pattern is strongest among lower-income and less-educated households. Analysis also suggests that increases in expected gas price growth are associated with greater perceived inflation uncertainty. However, quantitatively, the evidence suggests a moderate relationship between changes in ...